Wednesday preview: Tesco expected to reveal LFL decline in Q3

All eyes in the retail industry will be focused firmly on supermarket giant Tesco on Wednesday morning with the company scheduled to report on third-quarter trading.

All eyes in the retail industry will be focused firmly on supermarket giant Tesco on Wednesday morning with the company scheduled to report on third-quarter trading.

Last week, Nomura released a research report on Tesco (rated 'buy'), saying that it forecasts third-quarter like-for-like (LFL) sales excluding VAT and fuel to come in 0.9% lower than last year, a reversal from the 0.1% growth reported in the second quarter.

Similarly, Credit Suisse (which rates Tesco as 'neutral') said it expects "little underlying progress" in the third quarter given tough markets: the broker reckons that LFL sales ex-fuel ex-VAT will fall 0.75% in the quarter.

Seymour Pierce last week reiterated its 'reduce' rating for the stock, saying that it is too early to judge whether the group's 'Build a Better Tesco' strategy in the UK (through range and store refresh, space relay, service and increased marketing/promotional spend) is working. "From a share price perspective even if Tesco does have a relatively good Christmas, there will still be no visibility on whether UK profits have bottomed until the second half of 2013," said Seymour analyst Kate Calvert.

However, analysts at Jefferies decided to stay more upbeat, keeping their 'buy' recommendation on Tuesday and saying that Tesco is "gaining traction ahead of Xmas".

While the broker highlights that sales growth across the 'Big 4' supermarkets (Tesco, Morrison, Sainsbury and ASDA) was "subdued" last month (according to retail figures from Kantar), Tesco's market share continues to grow. Jefferies said that Tesco has outgrown (on a market share basis) its peers by 200 basis points ("the biggest rate of outperformance recorded in any four-week period for six years") and improvements in execution are starting to pay off.

"Tesco is approaching Christmas with the strongest trading momentum of the Big 4, and this seems to be hurting Sainsbury. Morrisons trading form remains poor, whilst ASDA is slowing in a controlled manner."

INTERIMS

First Property Group, Stagecoach Group

INTERIM EX-DIVIDEND DATE

Alliance Pharma, Atkins (WS), Big Yellow Group, Brown (N.) Group, Cello Group, Chamberlin, City of London Group, Cranswick, Creston, De La Rue, Dee Valley Group, Dee Valley Group (Non-Voting), Edge Performance VCT 'C' Shares, Electrocomponents, Energy Technique, Establishment Inv Trust, European Residual Income Investments Cell, Fuller Smith & Turner, Headlam Group, Hogg Robinson Group, Homeserve, London Stock Exchange Group, Majestic Wine, Management Consulting Group, MDM Engineering Group Ltd. (DI), Norcros, Northern 3 VCT, PayPoint, Phoenix IT Group, Plastics Capital, Rensburg AIM VCT, SABMiller, Severn Trent, Shanks Group, Slingsby H.C, Tarsus Group, TR Property Inv Trust, TR Property Inv Trust Sigma Shares, UK Mail Group , Value and Income Trust, Victoria, VP

QUARTERLY EX-DIVIDEND DATE

Bank of America Corp., Land Securities Group, Real Estate Credit Investments PCC Ltd

Q3

Tesco

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

ABC Consumer Confidence (US) (22:00)

Crude Oil Inventories (US) (15:30)

Goods Orders (US) (15:00)

ISM Non-Manufacturing (US) (15:00)

ISM Services (US) (15:00)

MBA Mortgage Applications (US) (12:00)

PMI Composite (EU) (09:00)

PMI Composite (GER) (08:55)

PMI Services (EU) (09:00)

Retail Sales (EU) (10:00)

FINALS

Brewin Dolphin Holdings, Innovation Group, Jelf Group, Sage Group, Silverdell

ANNUAL REPORT

Grainger

SPECIAL EX-DIVIDEND PAYMENT DATE

British Empire Securities & General Trust, Carnival, Renaissance Russia Infrastructure Equities Ltd, Rights & Issues Inv Trust Capital Shares, Wolseley

EGMS

Ablon Group Ltd., Middlefield Canadian Income PCC

AGMS

Asia Digital Holdings, International Biotech Trust, K3 Business Technology Group

UK ECONOMIC ANNOUNCEMENTS

BoE Interest Rate Decision (12:00)

BRC Shop Price Index (00:01)

Official Reserves (09:30)

PMI Services (09:30)

FINAL DIVIDEND PAYMENT DATE

Regenersis

FINAL EX-DIVIDEND DATE

Aberdeen Asset Management, Associated British Foods, British Empire Securities & General Trust, Conygar Investment Company, CVS Group, Debenhams, Grainger, Greencore Group, Local Shopping REIT, Northamber, Renewable Energy Generation Ltd., YouGov

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